Israel today blamed Palestinian leader Yasser Arafat for a suicide attack in Jerusalem that killed three Israelis and stopping truce talks in their tracks.

A meeting of security chiefs was cancelled, and Israel hinted at retaliation, saying it would not work for a ceasefire by itself.

The suicide bombing was the second in two days. The scene on King George street in central Jerusalem yesterday was familiar: the mutilated body of the bomber lay in broken glass and blood. Bleeding victims cried and sirens screamed. Dozens were injured.

Former Prime Minister Benjamin Netanyahu called for expelling Arafat, eliminating the Palestinian Authority, combing the areas to remove weapons and fighters and cordoning off the West Bank.

"Our goal must not be a ceasefire, rather cessation of terrorism," he said.

Transport Minister Ephraim Sneh of the dovish Labour Party rejected Netanyahu's formula, saying he "deludes the people with false claims." Sneh said "everybody wants to replace Arafat," but Netanyahu "does not say who would replace him."

Interior Minister Eli Yishai called for an all-out military operation "systematically by land sea and air, into all the Palestinian areas ... and go from house to house to carry out the necessary action."

Before the Jerusalem bombing, a Palestinian official said US envoy Anthony Zinni was to present bridging proposals at meeting today. It was not known to what extent the schedule was disrupted by the bombings. Zinni was also meeting Arafat today.

Both Zinni's previous truce missions were scuttled by surges of violence. He condemned the Jerusalem bombing and expressed "regrets that Chairman Arafat and the Palestinian Authority have not taken any steps or exerted any efforts to prevent such attacks."

In Washington, US Secretary of State Colin Powell called Arafat and demanded that he denounce the bombing. President George Bush said he was "disappointed" in Arafat's performance.

The Palestinian leader appeared at his West Bank headquarters and read a statement condemning the bombing, which was carried out by a member of his own Fatah movement.

"We strongly condemn this military operation that took place in west Jerusalem today, especially since it was against innocent Israeli civilians," Arafat, said. "We will take the appropriate and immediate measures to put an end to such attacks."

The Al Aqsa Martyrs Brigade, a militia linked to Fatah, identified the bomber as Mohammed Hashaika, 22, a former Palestinian policeman.

Estate agent Shlomo Levi said he has seen several such bombings in front of his shop. "It is like Russian roulette," Levi said. "It is a circle. You don't know if you will be inside it next time."